Fear of missing out, of course, is not fear at all but unbridled greed. The key is to hold your emotions in check with reason, something few are able to do. The markets are often a tease, falsely reinforcing one’s confidence as prices rise, and undermining it as they fall. Pundits often speak of the psychology of markets, but in investing it is one’s own psychology that can be most dangerous and tenuous.

If investors could know only one thing about greed and fear, they should know this: Over the 30-year period from 1984 to 2013, the Standard & Poor’s 500 Index returned an annualized 11.1%. Yet according to Ashvin Chhabra, head of Euclidean Capital and author of “The Aspirational Investor,” the average returns earned by investors in equity mutual funds over the same period was “a paltry 3.7% per year, about one-third of the index return.”

Bond fund investors fared even worse: while the Barclays Aggregate Bond Index returned an annualized 7.7%, investors in these funds “captured just 0.7% (not a misprint!) in annualized returns… That staggering underperformance is the cost that individual investors paid for following their instincts” by adding to and pulling money out of their funds at precisely the wrong times. In short, retail investors, in aggregate, substantially underperformed both the markets and the very funds in which they were invested.”

You have to know what you’re doing and why. The Emotional Trap blinds you to what you’re doing because you can’t see the consequences clearly. And the Intellectual Trap cuts you off from the only important why connected with your actions — knowing that what you’re doing will lead to what you know will create happiness.

To achieve genuine, durable happiness, you have to recognize your emotional nature and intelligently think ahead to create situations that will trigger happy emotions from your unique nature.

Then, when your plans have produced what you wanted, you can disregard your intellect, relax, and just feel. You’ll be able to act spontaneously within that context because you’ve eliminated any possibility of bad consequences.

Then you can allow yourself to be engulfed in a flow of genuine positive emotions. And that’s what life is all about.”

I’ve found that it’s a good rule to never make an important decision when your emotions are in control. I try to program myself in advance to remember this rule when I need it. When I’m in an emotional state (either positive or negative), I try to keep just enough intellect working to tell me one thing: don’t decide now. I wait until I’ve relaxed and can think more clearly.”

Not only do you feel; you think. Thinking is the conscious, deliberate, volitional attempt to perceive identities and utilize them. You can think to observe, to identify, to create, and to establish the conditions necessary for your happiness. Your thinking and action create conditions to which you respond emotionally.

You think in order to be able to feel happiness. Thinking is the means; feeling is the end. Your emotional responses tell you what things make you happy and unhappy.

But at the moments when you feel strong emotions such as hate, infatuation, anger, or excitement, your thinking is usually clouded. The Emotional Trap is the belief that you can make important decisions at such a time.

That’s the time when you’re least likely to recognize all the alternatives and consequences.”

An emotion is an involuntary response to something that happens. It isn’t intentional; you can’t command yourself to feel something. But when it happens, your body reacts — a warm prickling at the back of your neck, or a twist in your stomach, or a tightening of your chest. And there’s usually an urge to express yourself outwardly — through laughter, tears, talk, hitting or hugging someone.

These are emotions or feelings (I’ll use the two words interchangeably) — involuntary reactions to something that happens. The two basic emotions are happiness and unhappiness — the feelings of mental well-being and mental discomfort.

Other emotions are variations of those two. Positive emotions include love, affection, self-satisfaction, pride, anticipation of pleasure, any form of the glow we call happiness. Negative emotions include fear, hate, disappointment, sorrow, jealousy, guilt, any kind of mental discomfort.

Happiness is the object of your actions, the consequence you seek when you act. But it’s important to remember that happiness is an emotion. You can’t turn it on at will. You feel it as an involuntary response to the conditions in your life at a given moment.

Your emotional nature (like almost everything about you) is unique. What makes someone else happy might be interesting, curious, even fascinating to know; but it doesn’t tell you what would make you happy.

You can’t find happiness by telling yourself to “be happy.” Nor can you find it by doing the things that others have said make them happy. Nor can you find it by telling yourself that a “good” man or a “moral” woman or a “rational” person would be happy doing a certain list of things.

To find happiness, you must know how your unique emotional nature responds to things. You must observe and take seriously your own emotional reactions. For if you attempt to fit your emotions to a preconceived standard, you lose touch with yourself and blind yourself to the most important part of yourself — to what would make you happy.”